17 October 2012 8:26 PM

There will be no ‘aspiration nation’ unless families are freed from the stultifying control of the state

If David Cameron really wants an aspiration nation he had better
face the fact that his own family policies are stacked against it.

Nowhere is this gap between rhetoric and ‘anti aspiration’ reality
wider than in so called family ‘support’ policies - policies which also cost
the nation in deficit billions.

For
is not for want of tax payers’ investment in the poor (as the left protest)
that has stymied aspiration.

It is the reverse. State spending
on families with children has done nothing but rise.

Despite birth rates falling for much of the last 30 years, it has gone
up by 43% since the 1970s, according to a Policy Exchange report.

So where has this money
gone?

It hardly comes as a surprise that a huge proportion - 60% - of this
increase has been absorbed by the rising numbers of sole parent families.

Nor is it rocket science to see that channelling state income and childcare
support towards lone parents has had its own chicken and egg effect.

It is only logic that the number of births amongst those who stand to
benefit increases; that the need for child support expands in tandem, while
those who pay the taxes to foot the bill tend to limit their own family
size.

It is only logical too that if marriage is penalized (which it is)
rather than recognized in the tax and benefits system, it will decline, which
it has; that cohabitation will rise, as it has, contrary to received wisdom
only recently and in a quite historically unprecedented way.

For the fact is policy drives behaviour as much as culture and the two
are intertwined.

The consequence of this too, since cohabiting relationships fracture
more frequently than married ones, is that the state’s sticking plaster role
and costs as a surrogate father gets bigger.

This is what has happened. It is
not a judgment. It is a fact

Though David Cameron, in his conference speech acknowledged some welfare
injustice – namely the housing benefit system - he curiously ignored the key
injustice that stymies aspiration and depresses choice.

It
is the disposable income welfare trap that now ensnares average earning family.
It might as well be called the
aspiration trap.

Iain Duncan Smith, to his great credit, is battling to
rectify the benefits trap, by making work pay for the unemployed, and by trying
to cap the benefits of the workless. But
that does not do away with the problem of the stultifying effect of the
tax ‘credits’ system on the four fifths of the nation’s earning families it has turned
into welfare claimants.

For the legacy of Labour’s work and childcare credits is
constraint on families’ freedom of choice, independence and self-reliance
– the vey opposite of what Cameron wants.

Conditional social security and family payments they may get. But
they pay for them from their non-negotiable, tax and National Insurance
contributions.

It is a tax and benefits churning that is wasteful in
bureaucracy and unfair. The State
dictates how families spend their own money and traps them on one lifestyle
treadmill, of two parents working, whether of their choosing or not. It devalues and undermines essential mothering.

Expensive and interventionist these tax credits may be; but
aspirational and liberating they are not.

Worse, they set an aspiration ceiling on those very families who
are motivated to get on.

As Mothers at Home Matter set out in their Conservative
Party Conference flier last week, the shocking fact is that it is almost impossible for
a man on £24 K with three children to earn any extra net (disposable) income.

For
every extra pound he earns he loses a nearly equal amount in tax, tax credits
or benefits. Never mind the benefits
trap , this is the aspiration trap.

If he
needs to expand his family finances by a modest £3K extra per year of
disposable income to cover new essential costs what are his options?

Well, as
they point out, he might decide to work harder or longer, go for a promotion or
apply for a better paid position if one is around.

And,
indeed, he may be successful. But it will be only to discover that it will make no difference at
all to his family finances – that his extra effort is for nothing. He finds to his dismay that is almost impossible, whoever the primary earner
is, to earn extra net income; because for every extra pound earned a nearly
equal pound is lost in tax, tax credits or benefits.

When
he sits down to do his sums again, the reality dawns – his total income would
need to double to make that extra £3K!

Since
there is little chance of that what are the family to contemplate but his wife
entering the workforce, encouraged by the tax credit system?

Unsurprisingly
countless mothers are making this choice.
They are setting aside their instinct for what is most natural, to stay
at home with their infants (which is what 49% of of mothers would still rather
do) and re-enter the workforce, often on low pay.

The game
is still zero sum.

The mother loses her
nurturing role in return for hours of low paid work and a paltry additional
income, leaving them still no better off than families totally benefit
dependent

To
add to this general inequity we now have the impact of the means tested child
benefit, set to come on line soon. It bangs another nail into the
family’s coffin and further undermines mothers crucial home making and child
nurturing roles.

So while full child benefit will still be
given to the mother and father who are both earning, maybe a £100K
between, for a family with just one earner on £60k (usually the father) it will
be taken away.

Worse, as Jill Kirby pointed out on
Conservative Home last week, ‘married couples will be the first in line to
suffer the claw back because their relationship is on the record’.

These are the injustices Cameron should
face instead of playing with gay marriage and shared paternity leave gesture
politics. Aspiration will only return if
he reverses the negative impact of the last thirty years of so called family
support.

That means restoring tax
allowances for children, making good his promise for the non-working spouse’s
transferable tax allowance it means cutting right back tax credits except for
low income working families. It means
letting working families keep more of what they earn. It means ending the means
tested child benefit, except for the super-rich, before it begins.

Freeing
families to decide their own financial destinies and their own division of
labour would be the beginning of an aspirational family policy.

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